No Evidence for Loss Aversion Disappearance and Reversal in Walasek and Stewart (2015)
Publication type
Journal article with impact factorPublication Year
2021Journal
Journal of Experimental Psychology: GeneralPublication Volume
150Publication Issue
12Publication Begin page
2659Publication End page
2665
Metadata
Show full item recordAbstract
Loss aversion—the idea that losses loom larger than equivalent gains—is one of the most important ideas in Behavioral Economics. In an influential article published in the Journal of Experimental Psychology: General, Walasek and Stewart (2015) test an implication of decision by sampling theory: Loss aversion can disappear, and even reverse, depending on the distribution of gains and losses people have encountered. In this article, we show that the pattern of results reported in Walasek and Stewart (2015) should not be taken as evidence that loss aversion can disappear and reverse, or that decision by sampling is the origin of loss aversion. It emerges because the estimates of loss aversion are computed on different lotteries in different conditions. In other words, the experimental paradigm violates measurement invariance, and is invalid. We show that analyzing only the subset of lotteries that are common across conditions eliminates the pattern of results. We note that other recently published articles use similar experimental designs, and we discuss general implications for empirical examinations of utility functions.Keyword
Loss AversionKnowledge Domain/Industry
Marketing & Salesae974a485f413a2113503eed53cd6c53
10.1037/xge0001052